4
Japan’s pharmaceutical market is the second largest in the world and is one of the most important export markets for U.S. companies.
U.S. Commercial Service Japan
30 November 2010
Pharmaceutical Industry

Japan’s pharmaceutical market is the second largest in the world and is one of the most important export markets for U.S. companies. The market is projected to reach Yen 9 trillion (USD 96.1 billion at USD1=JPY93.68 using a 2009 exchange rate) in 2010, an increase of 1.8 percent over 2009, and is expected to grow by three to six percent annually between 2010 and 2014. Part of the growth is expected to come from a new premium system called the "premium for the development of new drugs and elimination of off-label drug use", which the Government of Japan (GOJ) implemented on a pilot program basis in April 2010. This new premium system minimizes downward pressure on new drug prices (for drugs without a generic equivalent) as long as the patent remains effective or for up to 15 years after the drug is listed under the National Health Insurance (NHI) reimbursement scheme. To qualify for this premium, manufacturers are required to fulfill requests from the GOJ to bring to market products that address unmet medical needs in Japan. Both Japanese and foreign drug industries consider this new premium system to be a major positive development as the GOJ has traditionally only revised pharmaceutical prices downward every two years. The new premium system is expected to promote the earlier introduction of innovative new pharmaceuticals into Japan and to help eliminate the drug lag and issues surrounding unapproved drugs and indications. Another positive development is the GOJ’s promotion of the “New Growth Strategy” that was approved in June 2010. The Strategy calls for the elimination of the drug lag as one of the most pressing issues and stresses the need to improve the clinical trials environment and accelerate review times for new pharmaceuticals in Japan.

Market Demand

The pharmaceutical market environment in Japan is expected to improve as the GOJ continues to take measures to expedite drug regulatory approval processes and to appropriately reward innovation under the National Health Insurance (NHI) reimbursement scheme.

The drug lag problem has been an issue for several years in Japan. Japan is reputed to have access to the lowest number of the highest selling globally available drugs compared to other advanced countries or neighboring countries (approximately 30 percent of the top selling drugs are not available in Japan). Also, Japan takes the longest average time to make a new drug available from when the drug is launched in the first country to the time the launch takes place in Japan (approximately four years). The GOJ has recognized that Japan suffers from a drug lag and has been taking various measures to address that issue such as improving the clinical trials environment and accelerating review times for new drugs. For example, in April 2007, the Ministry of Health Labour and Welfare (MHLW); the Ministry of Economy, Trade and Industry (METI); and the Ministry of Education, Culture, Sports, Science and Technology (MEXT) issued the “Five-Year Strategy for Development of Innovative Pharmaceuticals and Medical Devices”. The strategy called for devising comprehensive “policy packages” that would support the entire medical development process from research to product launch, and proposed expediting and improving the quality of product reviews, properly evaluating innovative products, and improving the clinical research and clinical trials environment. The strategy also included specific goals such as shortening the time required to launch a new drug by two and a half years (within a five year time frame), doubling the number of new drug review staff in three years (236 additional staff), assessing new innovative drugs appropriately, etc. Also, in April 2007, MHLW and the MEXT initiated the “New Five-Year Plan to Stimulate Clinical Trials” under which Clinical Trial Centers (CTCs) were to be established in order to make clinical trials in Japan more cost effective and timely. As a result of these initiatives, the number of reviewers, clinical trial consultations and approved new drugs have increased while, at the same time, drug review times have decreased. Further improvements in the regulatory environment are still expected. The latest Pharmaceutical and Medical Device Agency (PMDA) “Mid- term Plan (JFY 2009 – 2013)” aims to reduce new drug review times to nine months for priority items and 12 months’ total time for standard items by April 1, 2012. (The PMDA is an independent GOJ administrative organization that is responsible for the scientific review of drugs and medical devices.)